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Why Africa is Still Underdeveloped?

Why Africa is Still Underdeveloped?

Africa is blessed with abundant of resources both natural and human resource. The kind of rich resources that Africa has should make us the wealthiest continent in the world. What is the reason for the underdeveloped of Africa? Why aren’t we able to utilize our resources? Is Africa under some sort of resource curse?

Corruption, greed, ethnic division and regionalism. These are all practices which has enslaved the African man. We have given other continents the upper hand to exploit us.

All the time, we blame others for what is happening to our continent. For all the time we waste accusing or blaming our government for being corrupt. We can use that time to make the same analysis on different cases such as regionalism, exploitation that is killing our continent and figure out how it can be stopped. All right thinking people must put their heads together as a continent and share ideas about how we can help each other develop.

Image credit: The Telegraph

If we want free ourselves from ethnic division and unite as a continent to put ideas together we can develop every part of our continent. We need to start thinking global and realize that our extremely immature industry relative to the world industrial giants like the US and the European powers, the country`s growth has effectively butchered ours into non-existence. We need to start picking up the pace.

Instead of wasting thousands of millions on mansions and expensive cars, we could invest those billions in something productive and resourceful that will bring us economic development. Africans should stop thinking hand to mouth and think about the future, open our eyes to reality of the world we live in now. If we don’t stop our selfish behaviour in the near future our continent is going to be reduced to absolutely nothing.

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Debt vs. GDP: Is Ghana on the Right Path?

Gross domestic product (GDP) as used in this paper represents an indicator of the monetary value of all goods and services produced by a nation in a specific time period. GDP represents a strong index of a country’s economic strength – the higher the GDP of a nation, the stronger that country’s economy. The debt in this context refers to public debt owed by a nation’s central government. It represents both domestic and foreign debt.

Japan remains the third largest and Richest Economy in the world in terms of GDP. America is the first and China is only miles away to overtake America as it remains the fastest growing economy in the country.

Both America and Japan have a very strong economy and also among the Top 10 advanced (Most developed countries in the world) in terms of the Human Development Index as quoted by the World Bank.

Interestingly, these two great economies are currently featuring in the first 20 countries with the Highest Debt to GDP ratio. Japan, the third richest economy in the world tops the first 20 countries with the Highest Debt to GDP ratio. The D/GDP ratio of Japan as at today (2017) is 240.3%. A debt to GDP which is 3 times greater than Ghana’s D/GDP.

It will interest you to know that, no nation in the world has a higher public debt in relation to GDP than Japan. The nation’s soaring debt is currently around quadrillion yen, thus, roughly 10.5 trillion US dollars. Again, the total Debt of Japan is larger than the German, French and British economies combined. It is worth noting that, German, British and France remains the 4th, 5th and 6th richest economy respectively in the world (World Bank Report, 2017).

According to the latest World Bank figures, United States GDP as at September 2017 stood at $18 trillion and represents a quarter share of the global economy (24.3%). With about $7 trillion ahead of China, the United States is ranked 12th among the first 20 countries with the highest public debt. The country’s public debt to GDP ratio as at September, 2017 stood at 108.14%.

Surprisingly, 4 countries among the top 10 biggest economies in the world (USA, Japan, Italy and France) are also among the top 20 countries with the highest public debt to GDP ratio.

As at September 2017, The World Bank ranked Egypt as the 16th country with the highest public debt to GDP ratio (101.24%) in the world. However, Egypt remains the second biggest economy by GDP in Africa. Nigeria has the biggest economy in Africa (IMF, 2016) yet among the top 10 most indebted countries on the African continent. Eight (8) out of the top (10) economies in Africa also features in the top (10) indebted countries in Africa.

As at December, 2016, Ghana was ranked the 86th largest economy in the world (86/194), 14th biggest economy in Africa (14/54) and makes it the 2nd biggest economy in West Africa (2/16). Ghana has a D/GDP of 73.4% and ranked the 8th most indebted country in Africa. Ghana has accumulated more Debt yet richer in terms of GDP than Ivory-Coast, the world’s largest exporter of cocoa beans, and the fourth-largest exporter of goods. Does this give you any clue?

In June, 2010; Forbes ranked Ghana as ninth world’s worst economies and categorized Ghana as a typical example of the world’s worst-managed economies.

I Quote:

“Ghana is a country that shouldn’t be poor, but it is. The West African nation’s gross domestic product per capita fell 9% last year to $621, ranking it 154th out of 184 countries tracked by the International Monetary Fund, below resource-impoverished Haiti. With a $3 billion trade deficit last year and $4.9 billion in external debt, Ghana is struggling to pay its bills even as it sits on some of the world’s biggest reserves of gold and bauxite, as well as considerable amounts of offshore oil”

Ghana recorded its highest ever D/GDP in the year 2000. With a D/GDP record of 123.3%, higher than the current D/GDP of America, Singapore and France (Developed countries with the most debt), yet the Country’s GDP grew below 3%. This high D/GDP was drastically reduced to 26.19% in 2006, the lowest GDP in the history of the country and ranked amongst the top 10 countries in the world with the lowest public debt. Perhaps, declaring Ghana as a HIPC nation in 2001 saved Ghana the trouble of repayment and eased the heavy debt burden on the country. With this record of lowest D/GDP, the country recoded a GDP growth rate of 6.12%.

My Point:

Public debt represents a national and government debt which is owed by a nation’s central government. However, as a government draws its income from its population, government debt is an indirect debt on taxpayers.

Debt owed by countries must significantly correlate with the growth of its economy. If an economy grows, it must grow together with its people. Investing debt in the right projects may yield positive results and create enough proceeds to payback. The idea and argument against too much borrowing especially in Ghana to me is irrelevant, however, the need to create more value with the borrowed funds is my utmost concern. Ghana needs to be financially disciplined and practice prudent economic financial management.

As earlier mentioned, Japan tops all countries with the highest Public Debt to GDP yet among the first three largest economy and most developed countries in the world. Can this same concept of growing an economy through Public Debt be emulated in Ghana? Thus, growing our economy to match the standard of the advance countries like USA, Japan, Italy and France.

Our President, Nana Addo Dankwa Akufo Addo spoke of growing a Ghanaian Economy beyond AID, yet, the world’s richest economy currently records a D/GDP of 108.14%. Is Ghana on the Right Path?

Let me conclude by saying that, with the exception of Russia and Saudi Arabia who are ranked 8th and 9th among the first 20 countries in the world with lowest D/GDP ratio, the remaining lower indebted countries are not necessarily economic first-world powers. Perhaps, Saudi Arabia, the 8th country with the lowest D/GDP in the world has maintained this lower debts due to its high export rates of petroleum and petroleum goods considering the significance of oil in today’s world. The country produces enough oil and earns enough revenue to maintain a high GDP and additionally refrain from incurring debt.

Do you think Ghana can grow by depending on the proceeds from its natural resources like Gold, Cocoa, Timber, Bauxite and Oil?

The First Food Waste Supermarket in UK Opens

Food waste campaigners from the Real Junk Food Project have opened “the warehouse”, a store on the Grangefield Industrial Estate. Customers are invited to shop for food thrown out by supermarkets and other businesses.

The food is priced on a “pay as you feel” basis and has already helped desperate families struggling to feed their children.

“The warehouse has absolutely been our lifeline over the past month or so,” Kirsty Rhodes told The Independent.

Kirsty was recently diagnosed with a chronic pain condition, leaving her husband with no choice but to leave work to take over most of the care of the couple’s three children. Overnight the couple’s household income was reduced to almost nothing.

“With three young children and two adults to feed we started to struggle straight away. Luckily we took the plunge to go to the warehouse and it was amazing!” Kirsty said.

So far the family have bought fresh pasta, juice, pasta sauce, desserts, fruit, vegetables and lots of salad. “We’ve even had baby milk on one occasion and our baby is 7 months so it was perfect,” she said.

Kirsty has plans to run a workshop to teach people how to make jam after she used fruit from the warehouse to make her own.

Adam Smith, founder of the Real Junk Food Project, which is behind the food waste supermarket, told The Independent that there are plans to open a warehouse selling surplus produce in every city in the UK.

“We’re about to start in Sheffield and Bradford,” he said. “Every city will now obtain central storage and run a ‘people’s supermarket’ as well as Fuel for School.”

Fuel for School is the work of a group of food activists from The Real Junk Food Project who deliver surplus bread, fruit, vegetables and dairy products from supermarkets to schools, where it is used to feed hungry schoolchildren.

(Evening Standard)

The food, which may otherwise have found its way to landfill, is used to feed 12,000 children a week.

The food has been diverted from landfill after it was thrown out by supermarkets and other retailers (The Real Junk Food Project)

The Real Junk Food Project is also working to expand its pay as you feel cafe movement. There are now hundreds of cafes around the country feeding people on food waste.

As with all the initiatives, customers are invited to pay for their meal in money, time and skills.

“We need volunteers,” Adam says of the new food waste supermarket. “Driving, weighing, sorting, stacking shelves, cleaning and much more. Lots of opportunities for people to get involved and give back.”

According to an investigation by the Evening Standard, supermarkets are throwing away £230m of edible food.

The Independent’s sister paper, the Evening Standard, has launched a campaign on food waste in London. Find out more here.

Exchange Rate Volatility Concerns Everyone, not Only Importers and Exporters

The CEO of an European airline, the cocoa farmer in small farming town in Ghana, the Kenyan student in the UK and the blogger in India, all have a common thing to worry about or be excited with; movements in exchange rate.

Exchange rate volatility is not a concern for only financial institutions, importers and exporters. Exchange rate has become an even greater concern as more and more people engage in some form of international trade, physically or online, which mostly involve exchanging one currency for another in settlement of transactions.

Online Retail (e-commerce)

Growth in e-commerce in an era of globalization has more to do with it than you can imagine. Retail business, which hitherto, was often confined within the boundaries of a country, is now almost borderless. Australians can buy goods from Canada via online shops, which would require an exchange between the two currencies. Similarly, many Africans are shopping online directly from UK and US stores with their visa and mastercard. Items that used to be purchased locally are now compared with foreign options, and a decision made whether to patronize the local product or simply pick a smartphone and purchase it from an e-commerce site in another country.

Exchange Rate Volatility Affects Everyone

Cocoa farmers in Ghana and Cote d’Ivoire are concerned with how much is paid for a bag or a ton of cocoa beans, as this is directly determined by the price of cocoa in the world market (often priced in US$ per ton) and the prevailing USDGHS exchange rate, in the case of Ghana. Whether they know this or not does not matter, as the amount they receive for their hard work throughout the cocoa season finally comes down to the price of cocoa and the exchange rate. Similarly, bloggers in India are concerned with movements in the Indian Rupee against the US dollar, if they’re relying heavily on revenue streams such as Google Adsense.

CEOs of multinational corporations and foreign students are both impacted by changes in exchange rates. Movements in exchange rates can either increase or decrease your income and liability, and during extremely unfavourable movements, businesses have had to shut down, trips cancelled, education shattered, workers laid off, among many other effects.

Be Concerned Too

Exchange rates movements are a concern for all. There is no full insulation to the movements in your home currency against major currencies such as the US dollar, the British Pound and the Euro. Directly or indirectly, our pockets are impacted by this, and we should be equally concerned as much as the traders on Wall Street follow the news.